Whether you’re renting or looking for your first home, there are always diamonds in the rough. Nonetheless, some eager homeowners can’t wait to get out of their old grungy apartment and demand a comfortable place they can call home.
As such, many are left with the huge dilemma of buying a move-in ready home or a fixer-upper. There are certainly pros and cons of each and the final decision will largely depend on your unique situation.
After seeing both angles, you can feel confident in making the right choice for your dream home!
Should You Move?
Before you decide why type of home to move into, you have to decide ig moving is the right call. In order to make that important (and expensive) decision, you must do your research. Below is a list of the information you need and where to get it.
- The price you could sell your home for and the cost of a home that you could buy that would meet your needs. You can also ask a local real estate agent to help.
- The cost to move. Typical cost is 10% of the value of your home, but your cost will vary based on a number of factors. Again ask a local real estate agent who can help you zero in on this cost.
- The cost to remodel and the payback. You can ask an architect or a contractor for an estimate of the cost to remodel. Estimating the payback (payback is the amount your home will appreciate because of the remodel) is a little more difficult. Again a good real estate agent can help you with this.
- Don’t forget about property taxes. Depending on where you live this can have a big impact on your cost to remodel and your cost to move.
- A complete list of the reasons you want to remodel and the reasons you want to move.
Reasons to move include:
- You want a different location; e.g., closer proximity to work or shopping.
- You want better schools for your children.
- You don’t like your neighborhood or your yard.
- You have the largest and nicest house in the neighborhood, and more improvements will not be a good investment.
Reasons to remodel include:
- You like your location, neighborhood and schools.
- Many of the homes in your neighborhood are larger and nicer than yours.
- You like the unique floor plan of your home.
- You want to live in your dream home. It is often easier to get your dream house by remodeling than by moving.
At this stage in the game, more often than not, most homeowners choose to move.
Unquestionably, one of the biggest advantages of buying a fixer-upper is the price. Fixer-uppers give eager homeowners the chance to own their own property even if they can’t afford those move-in ready homes so many of us deeply desire.
Homes that need work are almost always priced accordingly, as the owner knows the home needs work before it can be sold and/or occupied. Therefore, the sale price is usually below the potential market value. As such, buying a fixer-upper makes perfect sense for those planning to move in a few years.
Property taxes are based on the home’s sale price. Therefore, your biannual property taxes will be less if you buy a fixer-upper as opposed to a new home. Additionally, according to American Financial Resources, Inc., some fixer uppers also allow the owners to claim an investment tax credit for qualified rehabilitation costs. This typically applies to historic homes that are listed on the National Register of Historic Places.
There are other ways to save money when it comes to obtaining a loan for a fixer-upper. For more info, please see Renovation Financing.
Besides money, the other key advantage of buying a fixer-upper is a blank canvas. If you go into a deal knowing you’re going to spend money to fix it up, you have the freedom to design the house however you wish. If want an open concept, you can do it. If you want to go bold in the kitchen, you can do that too.
Fixer-uppers let you tailor your house to your exact tastes. While it’s certainly more work, this power can not be underrated.
There’s no doubt that fixer-uppers require more work than move-in ready homes. Not only will you have to research local contractors and work with them during the remodeling process, but to save money, many eager homeowners get their own hands dirty.
Removing an old toilet, painting a bedroom or demolishing that really ugly living room may sound like a chore, but many find it invigorating. Either way, prepare to get your hands dirty.
Move-in ready homes cost more because they are just that. As soon as you unpack your hundreds of boxes, your home is ready. The same can’t be said for a fixer-upper.
Oftentimes, the remodeling process can take months until the home is move-in ready. This is especially troublesome for those working with an expiring lease. Furthermore, we know how exciting it is to move into a new home. Sadly, that excitement will have to take a back seat if you purchase a fixer-upper.
In any fixer-upper, there will always be surprises. You can’t know what’s behind those walls or around those pipes until you open them up and get to work. Yes, similar surprises can occur with move-in ready homes, but as you can imagine, those homes are much more updated than your average fixer-upper.
Remodeling Costs Could Outweigh Savings
It is vital to do your research before you purchase a fixer-upper. There are rare occasions where the remodeling costs could outweigh your initial savings. So, whether you have to redo your bathroom or renovate the kitchen, make sure you look up the average costs to remodel every room before you write that big check.
Move-In Ready Pros
Move-in ready homes require little, if any work. As soon as you move in, all the work is done. There is (hopefully) no painting, no demolishing, no removing toilets and no maintenance. Move-in ready homes let you enjoy the comforts of your new home as soon as you purchase the property.
New Design Elements & Technology
There are certain design elements that seem to come with every new or remodeled home. As opposed to fixer-uppers, new homes come with design elements today’s lifestyle demand. Those elements include: open floor plans, walk-in closets, barn doors and hardwood flooring to name a few.
New homes are also equipped with the latest technology built right in like alarm systems, speakers, Internet wiring and cable, saving you lots of time and money.
As referenced above, one can secure financing for a fixer-upper, but a home loan for a move-in ready house may be easier to obtain. Your odds will of course depend on your credit history, down payment, residential income and more, but obtaining a 30-year fixed mortgage will be easier to attain.
Newer homes tend to be more energy efficient. Not only will an energy efficient home keep you warmer in the winter and cooler in the summer, but it will also save you thousands of dollars in utility bills over the home’s lifespan.
Move-In Ready Cons
Move-in ready homes are almost always more expensive than fixer-uppers. If they weren’t, no one would ever buy a fixer-upper. As such, if you want to buy a move-in ready home, expect to pay more than you would for a fixer-upper.
As a dream home, you want it to be perfect. You may love the master bath and the hardwood flooring, but your husband may have a few issues with the brand new kitchen. Either way, there will always be some give and take when it comes to buying new homes. If you’re not into the whole DIY scene, the chosen designs will have to stay as is.
Unless you want to pay to remodel or get your hands dirty, move-in ready homes give you little freedom to customize the home as you wish.
Newer homes rarely offer the unique architectural details older homes present. While this may not be an issue for some, others love those distinct details outside the home.
Keep in mind, few homeowners, if any, change the look and feel of the home exterior (excluding landscaping, pools, etc.).
Dream homes exist all over the world. Some may see it under that grungy looking Victorian, while others see it in newer construction. Either way, as you have seen above, there are plenty of pros and cons in purchasing a move-in ready home or a fixer-upper. Which one are you going with?
Be sure to contact your local remodeling pros for renovation estimates before making this big decision.